We won a tentative decision on a business to business

Customer Question

lawsuit for over $1MM. There...

We won a tentative decision on a business to business lawsuit for over $1MM. There is also a punitive damage award for hundreds of thousands of dollars on top of the million dollar tentative decision for the judgment. How do we collect? We are concerned that if the judgment is made final then the company will bankrupt itself and hide assets. The company is willing to settle but claim they have little to no liquid assets and want a payment plan. We would like a lump sum now and a payment plan with the rest. What contingencies need to be put in place to ensure they pay? Ideas include making them personally liable, making the judgment go in full force if they miss a payment, etc. Is there such thing as a performance bond for a payment plan? What do we need to do to intelligently set it up so the full amount is paid? How does CCP 664.6 apply? Is there something more, better? We demand that they stipulate to judgment in event of default under specified terms for said judgment.

Punitive damages don't happen on a mere contract claim. What is the judgment for (it makes a difference)?

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Customer reply replied 8 years ago

Here is the language of the tentative decision (less the names of the parties involved):

"[Company A] wrongfully profited by the use of [Company B]'s proprietary information and wrongfully interfered with the existing and prospective contractual relationship which resulted in economic loss to [Company B] in the amount of [$1,XXX,XXX.XX].

"The Court further finds that [Company B] has established by clear and convincing evidence that the conduct of [Company A] which caused harm to [Company B] involved fraud, malice and oppression. Accordingly, based upon the evidence presented relating to the net worth of [Company A], the Court awards punitive damages in the amount of $X000,000.

"The Court further finds that the defendants shall be enjoined from the use of [Company B] materials in the course of sale...further enjoined from marketing...at any of the locations identified in [Company B] materials."

--Note: Company A is still doing business. There are a few days left before a final judgement or settlement is made. Talks of settlement include a lump sum payment along with monthly payments and collecting accounts receivable. Also, adding a stipulation that if Company B defaults that the judgement becomes enforcable immediately. How do you recommend we structure it to ensure we get paid and they don't default?

A judgment the result of fraud, malice and oppression cannot be discharged in bankruptcy -- with the caveat that you will have to file an "adversary complaint" in bankruptcy court, which is like a second lawsuit, to have the court deem the debt nondischargeable. So, that may be an added future expense to try to save your judgment.

If it were me, I would let the judgment issue, because that judgment is entitled to full faith and credit and that will get your bankruptcy claim perfected faster and for less money.

After that, I think that I would ask for the debtor to identify its assets so that I could determine whether there was anything that could be sold to pay some of the debt upfront. Simultaneously, I would want all payments to the debtor made to an account over which I had signing authority, such that I could withdraw a certain percentage of the proceeds from each payment, and leave the rest for the debtor.

That way, there would be no "slow pay."

Whether you can accomplish all this I have no clue. But, as you've surmised, running the debtor out of business is guaranteed to not get you paid.

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Customer reply replied 8 years ago

Thank you. We want them to stipulate to judgment. How do we structure the deal so they stipulate to judgement that will go in force (if they don't fulfill a payment plan) and not appeal?

1. You can enter into a settlement that produces a voluntary dismissal, after which the settlement becomes the enforceable instrument as a substitute contract, but, of course shows no evidence of fraud and can be wiped out in bankruptcy -- so, in my opinion would be a very bad resolution.

2. You can allow the judgment to be made, and then negotiate a separate payment plan while maintaining the judgment as separately enforceable afterwards for the next 10 years, and renewable for another 10.

Considering that you will almost certainly receive a favorable judgment at this point, then unless you believe that the defendant will spend the $20,000+ to appeal the decision, I don' see what you have to gain by negotiating.

I could, of course, be missing something, because I'm not involved in the case enough to know all the knarly details, so that's just my 2 cents.

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DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).